Coming off the 2010 Mobile World Congress event, one of my key takeaways is that the groundwork is starting to be laid for what the "operator of the future" might look like. This is not the traditional "smart pipe vs. dumb pipe" argument. Rather, leading operators should be undertaking a broader re-think, recognizing that:
- The competitive landscape is changing, rapidly and radically
- The pace of device innovation has accelerated, which means 4G will be leveraged far more quickly than 3G was
- Data is the main growth driver of this business, yet wireless "economics" are not Internet "economics"
- There are core assets that need to be unlocked, taking operators out of their traditional comfort zone
Here are four guiding principals of what I think this new world might look like.
1. Disappearing distinction between voice and data
The Verizon-Skype announcement was an important signal here, analogous in some ways to the fact that WiFi, initially perceived by the operators as a threat, has become a lifeline. With capable 3G networks and progress on voice over LTE, I believe a few years from now, a customer will have an "access plan," rather than thinking about "voice" and "data" plans. They'll buy an X number of gigabytes "bucket" from their operator, with much greater flexibility about how those bytes are shared across multiple devices, or even individuals. Think "family plan," for data. A MiFi or Sprint Overdrive type device will be the core, portable "access card," with numerous other devices drafting off of it.
2. Economics will be front and center
Even with 4G, the realities of wireless economics be an important governor of what people will be able to do with their mobile devices. Current assumptions peg the cost of delivering data in a 4G world at about $1 per gigabyte. Today's average broadband household consumes 10 GB to 15 GB, but that number is growing nearly as quickly as mobile, given video and other rich media. As an example, Comcast recently sent a letter to its subscribers, inviting them to "view their data usage" while at the same time essentially capping them at 250 GB per month.
When a customer wants to download a 10 GB movie on their mobile device, they might be flashed a message to "switch over to WiFi," or incur a premium charge--similar to how the HD version of a movie on iTunes costs extra. One can see how femtocells might play the role of residential traffic gateway.
3. Operators are out of the "product" business
When is the last time you saw a major, national product launch from an operator that wasn't a new phone, price plan, or network-related message or enhancement? The app store phenomenon has certainly caused a re-think of what a product (a la VCast, Navigator, and so on) means, from an operator's perspective. Rather than defaulting to the argument that the operator is just providing the "pipe," I think the operators will inject themselves more centrally in the content and applications market, signing deals to deliver unique, or exclusive, content or applications. Sprint's highly successful relationship with the NFL is an early example here. This template will be expanded to a variety of content, such as books, games, and TV or movie programming, with the added benefit of being able to command premium advertising dollars. This jockeying for content deals will favor the larger operators, as they battle with Apple, Amazon and other distribution platforms, and try to leverage content across their multiple screens and networks.
4. Unlocking additional assets
The shifting competitive landscape, and the growing influence of Apple, Google and other non-"operator" entities is causing the operators to think about what core assets they might be able to leverage. While this topic alone could be the subject of numerous columns, let me throw a few teaser thoughts out here:
- Billing platform. Already part of their app store efforts, billing could be part of a much deeper dive into m-commerce and micro-transactions, as has been successfully demonstrated in Japan and South Korea.
Data warehouse. Operators are understandably cautious here, but analytics is going to be a critical element of the delivery of more contextually relevant content, targeted advertising, and so on. Why cede this to Google, Microsoft, and Amazon?
- Customer service. Wireless operators have huge call center assets. Why not turn this into a revenue opportunity, a la Apple Care? Operators have an opportunity to excel in an area where the Internet and consumer electronics world has failed miserably. See my January column, "Who ya gonna call," for more thinking on this topic.
- Wireless and the cloud. Network. Storage. Hundreds of millions of devices under management. Huge direct and national account sales force. Hundreds of thousands of BES servers. Data Warehouse. Call centers galore. Doesn't this all spell a next gen opportunity in the enterprise?
- Retail Distribution. Wireless operators in the U.S., run, collectively, some 10,000 of their own retail "doors"--a phenomenon unique to this geography in terms of percentage of sales. Yet the wireless store "experience"--mediocre look and feel, and high percentage of non-revenue generating transactions--has allowed Best Buy, Apple and others to become a more important part of the mobile retail landscape. As wireless becomes an integral component of the consumer electronics and digital media framework, that physical space could be used much more effectively.
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Lowenstein's View: The new world of the wireless operator
Source: Fierce Wireless
Date: 02/25/2010
